Is This the End for DStv? MultiChoice’s Profit Takes a Massive Hit

MultiChoice Group, the South African pay-TV company, reported a significant decline in its half-year profit, attributing the 99% drop to a challenging operating environment. The company, which operates DStv across 50 sub-Saharan African countries, faced headwinds from weakening local currencies, particularly in Nigeria, and severe power outages in Zambia.

[ays_block_subscribe id=’1′]

Despite these challenges, MultiChoice’s underlying performance, as measured by adjusted core headline earnings per share, fell to 2 cents per share, down from 356 cents a year earlier. Overall group revenue decreased by 10% to 25.4 billion rand, but organic growth, excluding foreign exchange effects and mergers and acquisitions, reached 4%.

The company experienced a decline in subscriptions, with a 5% drop in South Africa and a 15% decrease in the Rest of Africa. Additionally, increased investments in the streaming platform Showmax, aimed at competing with global giants like Netflix, Amazon, and Disney, further impacted profitability.

MultiChoice emphasized that excluding Showmax, the group would have seen a 28% increase in trading profit on an organic basis. Despite this, the company’s shares fell 0.3% at 1212 GMT.

Here’s what it means for you:

1. The company may consider raising subscription fees to offset costs and maintain profitability.
2. The company’s declining performance could lead to a decrease in its stock price, affecting your investment returns.
3. Investing in MultiChoice may be riskier due to the company’s current financial challenges and uncertain future outlook.

Source; Reuters

[/ays_block_subscribe]